What they didn't tell you about McDonald's' mobile payments trials

If you saw recent news reports about McDonald’s testing mobile payment technology in Austin, Texas, and Salt Lake City, but wondered what it is they are testing, you were not alone. None of the articles I saw included specifics, but here’s the skinny: Some, if not all, of the McDonald’s restaurants testing mobile payments in those markets are working with the Isis Mobile Wallet.

McDonald’s Corp., through media liaison Ofelia Casillas, declined to name the technology or technologies involved, but confirmed in an email: “At this time we are testing mobile payment in Salt Lake City, UT, and Austin, TX…We are testing some of these technologies in a few markets, so it’s premature to speculate on the decisions we may make after the tests...”

But the list of businesses accepting Isis Mobile Wallet payments found at the Isis website includes McDonald’s units in Austin, and McDonald’s operators in Austin have tweeted about their acceptance of such payments on Twitter.

Austin and Salt Lake City are the two test markets where Isis launched.

The Isis mobile commerce platform is backed by wireless carriers AT&T Mobility, T-Mobile USA and Verizon Wireless, who, combined, claim access to more than 200 million subscribers. It works only for their customers with smartphones loaded with Isis software and embedded with Near Field Communication chips or fitted with phone sleeves with NFC chips. To support the Isis virtual wallet, the NFC chip-equipped phones must also be outfitted with a special “enhanced” SIM card.

NFC chips support short range wireless data transmission between two devices, which, in this case, would be the consumer’s NFC chip-embedded/enhanced SIM card phone and a merchant’s wireless-data-reading payment card terminal, such as those used for so-called swipe-free or tap-n-go cards, including ExpressPay, Zip, PayPass and payWave.

Isis users pass their phone near the payment card reader to complete a transaction and may also opt to receive special offers or take part in merchant loyalty programs. Depending on the merchant’s setup, an Isis user may be able to redeem an offer, pay and update loyalty program information with just one pass of their phone over the card reader. Some merchants will only accept Isis payments, and others might also redeem digital offers or exchange loyalty program information, but require the user to show a bar code or numeric code stored in the virtual wallet.

Today, the Isis Mobile Wallet can only be used with these payment cards: American Express and the OPEN small business card by American Express; Chase Freedom, Chase Sapphire and Slate from Chase; and JP Morgan Palladium. Isis brass said other cards might be supported in the future.

Those same officials have also said that the Isis platform will be rolled out nationwide sometime this year.

It is obvious that mobile payments technology interests McDonald’s and other restaurant companies looking to accelerate transaction times and that understand consumers and their love of their smartphones and desire for convenient ways to settle tabs, receive special offers and track and redeem loyalty program points. Starbucks’ investment in, and use of, the Square payment platform, which can run on phones without NFC chips or enhanced SIM cards, also attests to that interest, as does the use of LevelUp by the 20-unit Sweetgreen chain, among other examples.

Whether most consumers will accept a variety of brand-driven mobile payment schemes – one for this restaurant chain, one for another ­– or hold out for a more standardized approach would seem to be the billion-dollar question. While the mobile payment support industry, by virtue of its fragmentation, has framed that question, some in the restaurant and merchant community – including goliaths like McDonald's as well as independents – are testing their way to an answer.